BUSINESS

Properties Pass Down China’s Construction Supply Chain in a ‘Debt Relay’

Published: Oct. 26, 2026 11:31 p.m. GMT+8

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Founded in 1995, Oriental Yuhong primarily produces building waterproofing materials and provides waterproofing construction services, with real estate developers serving as its major clients. Photo: VCG

Chinese construction suppliers are using homes received against unpaid bills to repay their own creditors — sometimes before taking legal ownership — as the property downturn strains payments across the industry, recent company disclosures show.

Filings by Beijing Oriental Yuhong Waterproof Technology Co. Ltd. offer a glimpse into these arrangements. The waterproofing supplier counts developers among its major customers and faces pressure to collect overdue payments and manage asset impairments.

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Chinese construction suppliers are using homes received against unpaid bills to repay creditors, sometimes before taking legal ownership, per recent disclosures.
Beijing Oriental Yuhong accepted assets worth 75.5M yuan and used 19.2M yuan in properties to settle liabilities in Q3 2026, with some properties used before title transfer.
The practice has increased since H2 2021; Palm Eco-Town proposed a similar debt relay for 20.96M yuan, while property values may be 10-20% above market prices.

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Who’s Who

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What Happened When

Second half of 2021：: Property-sector risks began surfacing, making practices like using homes to settle debts more common, as noted by a lawyer specializing in construction debt disputes.

End of June 2026：: Keshun Waterproof Technologies Co. Ltd. held debt-settlement properties with a gross carrying amount of 914 million yuan, with accumulated impairment provisions totaling 91.58 million yuan.

March 2026：: A court terminated enforcement proceedings in a case involving Palm Eco-Town Development Co. Ltd. after it sued a client over unpaid construction bills, because the client had no assets available for enforcement.

Sept. 24, 2026：: Palm Eco-Town Development Co. Ltd. announced plans to accept 10 properties and 10 parking spaces provided through the client’s affiliated developer to settle 20.96 million yuan in construction payments and interest, and to use the same assets to repay eight suppliers.

Before 2026 Q3：: Beijing Oriental Yuhong Waterproof Technology Co. Ltd. accepted properties and other assets to settle receivables with a book value of 75.5 million yuan ($11.3 million) in the third quarter of 2026, according to an Oct. 25, 2026 filing.

Oct. 25, 2026：: The filing by Beijing Oriental Yuhong Waterproof Technology Co. Ltd. disclosed the acceptance of properties to settle receivables and use of previously acquired debt-settlement assets or own properties to repay liabilities with a book value of 19.2 million yuan in the same period.

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